Product Recalls – Post Event Actions and Future Quality Improvement

Juran Blog, Knowledge

If you’ve paid attention to the news in recent years you’ll have no doubt seen some pretty big corporations issuing product recall notices. In the motor industry alone, Toyota, General Motors and Honda have each had to admit to errors sufficiently serious that products had to be recalled.

In the case of Toyota, over 14,000 vehicles built over a two-month period were potentially affected by an error relating to the backup camera. It’s supposed to activate when the vehicle is put into reverse, and to display the area behind the vehicle. In the case of those affected, this didn’t happen. Although the company estimated fewer than 1% of cameras were actually defective, the risk posed by an accident while reversing warranted a 100% recall.

The General Motors recall was due to a faulty ignition switch that was liable to switch off the engine while the car was being driven. As well as losing power, it meant that in the case of accident, the airbags would not inflate. Some 80,000 vehicles were affected.

Airbags are intended to save lives and reduce injury, but the inflator used in almost 13 million Honda vehicles carried the risk of itself exploding. That meant that rather than releasing something to absorb impact, shrapnel would instead be fired into the car. Honda wasn’t the only automobile manufacturer affected by the faulty component, but you can bet that for anyone who was affected by the recall, it’s the only company they will remember – especially as some vehicles were recalled twice, due to the replacements that were fitted on the first recall also being faulty.

Issuing a product recall is a drastic step for a company to take. Not only does it involve a high-profile public admission that something has gone terribly wrong, it also involves possibly long-lasting reputational damage. There’s undoubtedly going to be a financial impact – loss of business, falling share values, plus the cost of possible damage claims. Finally, depending on the nature of the defect and the outcome, there’s the risk of prosecution or regulatory censure.

General Motors in particular paid a high price – not helped by the fact they lied to both US regulators and customers about the defect. The company ultimately paid out $600 million in compensation to accident survivors and handed over a forfeiture of $900 million to the government.

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Common Causes of Product Recall

Behind almost every product recall lies a breakdown in a system or process, from supplier management to design standards to quality control.

Failure to properly manage suppliers

It’s as important to monitor the quality of goods received from suppliers as it is to monitor the quality of components and products manufactured onsite. A failure to adequately do so can result in product recall. Most organizations have a rudimentary process for assessing, segmenting, improving and delisting suppliers. More focus in this area will directly impact recalls, as most companies are dependent on external suppliers and are more of an integrator of those parts.

Lack of basic understanding

Design errors may be driven by a lack of understanding of criteria such as required tolerances or even the basic customer specification, and can lead to component or product failure. Many times it can be as simple as not clearly understanding what actions could cause errors during the next stage of the process.

Failure of quality standards

Quality control and assurance systems are intended to maintain safe standards of manufacture, but if standards are allowed to slip, equipment isn’t correctly calibrated or measurements are inaccurate, defective goods may be passed as acceptable. Controls and standards should be reviewed biannually to confirm their validity to the current process design.

Failure to observe critical-to-quality characteristics

It’s important to know what characteristics are considered to be “critical to quality” and to monitor those especially closely. Failure to do so can result in unsatisfactory goods being issued.

Prioritizing quantity over quality

If hitting production targets is considered more important than meeting quality standards, it can lead to marginal products – prone to failure – being released. In many cases it is better to “slow down to go faster”; more attention to detail typically reveals potential issues before they develop into product failures.

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How to Avoid Product Recalls

With careful planning and well-thought out systems, it’s possible to avoid having to issue a product recall. The following are key elements of a robust holistic approach to quality.

Ensure effective measurement and management of the supply base

Everything depends on the quality and provision of raw materials, so ensuring that the quality and supply of materials is robust and to standard is a good starting point.

Be clear on critical-to quality-characteristics

Ensure that agreement is gained with regard to those characteristics that are critical to quality – the standards that must be met to ensure customer satisfaction – and see that they are documented in quality control plans.

Ensure audits and auditors are fit for purpose

Ensure that robust audit methods are in place and that auditors are well trained in their use.

Establish appropriate measuring systems

Measure the right things and use the data. This includes using the best and most appropriate measuring systems, including detection sensors, then interpreting the data, not just recording it; and using what you learn to improve process capability.

Ensure understanding in the management team

Work with leaders and managers to ensure that the necessary balance between delivery and quality is understood. This is underpinned by the development of meaningful metrics and high-quality training.

Listen to customers

Customers – especially unhappy customers – provide some of the best and most valuable feedback a company could ask for, but in order to benefit from it, it’s necessary to be listening. Develop ways of gathering and interpreting customer feedback and, where a trend emerges, take action to fully understand and then deal with the issue.

Remember that customers may be both internal and external. Internal customers are people within the organisational structure, including stakeholders, and external customers include consumers and regulators.


Effective Management of a Product Recall

In the event a product recall should become necessary, there are certain steps that can be taken to manage the process.

Cut the supply

If you become aware of a problem, you need to shut down the supply of that product. If you can, ensure that the failure is restricted to existing but not-yet-shipped products. Better a supply shortage than a supply of defective products. Also make sure that you have identified back-up suppliers for critical items in the manufacturing process.

Tell those who need to know

Depending on the issue and the stage at which it is discovered, this could mean contacting affected customers direct, putting out an appeal via the media and/or informing regulatory agencies. Consider also what will be required to appease affected parties.

Get to the root of the problem

Once the supply has been halted and the affected people informed, you need to find out why the problem happened in the first place. Conduct a full root cause analysis (RCA) to get to the heart of the matter. Having a standard process for conducting effective RCA is the key, as it acts as a check that nothing has been missed out and ensures consistency. Allowing each area to decide on their own method is not effective.

Make necessary changes

Once you know the root cause of the problem, you can take action to ensure it doesn’t happen again. Ensure any new standards or practices are recorded and integrated into quality control plans and practices.

Implement an audit schedule

In order to make sure standards are maintained, audit the new plans and practices. It’s a good idea to educate suppliers and to get them to participate in self-audits. Provide a method for them to use, train them on it, and monitor their application and success.

Conclusion

The most basic component of a good quality management system is quality control, and the issue when it comes to product recalls is a lack of quality control. Often the fault lies somewhere in the mix of quality control standards, measuring techniques and employee skills.

Ensuring you have robust standards and checking in place, listening to feedback and responding promptly to issues will reduce the chance of a product recall becoming necessary and also help manage the process if the worst should happen.

Author: Juran

For the past 75 years, Juran has been an industry leader in performance excellence. We are your on-demand team of trainers, coaches, and expert consultants. Built upon the philosophies laid out by Dr. Juran, the father of quality, we put you on the fast track to results by designing improvement initiatives that actually work. We aim to help all organizations achieve the highest quality of products, people, and processes, and we understand the importance of transferring our knowledge to your team to guarantee the success of your program in the future.